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UWM Takes 30-Year Fixed to 2.5% Level. Will Competitors Follow?


May 14, 2020 by Marc Rapport

United Wholesale Mortgage (UWM), which claims about a third of the market share in wholesale mortgage lending, is now offering its brokers the ability to offer borrowers 30-year fixed-rate loans as low as 2.5%.

That compares to 3.57% posted for a 30-year fixed on Bankrate.com as of this writing, although that site says many lenders have removed their rates because of current market volatility caused by the coronavirus pandemic.

(UWM's example is $829.78 monthly for the principal and interest payment on a $200,000 30-year fixed-rate loan at 2.875%. Bankrate's calculator at 3.57% puts that monthly payment at $905.92.)

Confident in a rebound

That volatility -- and the quest for market stability -- was part of the pitch for UWM's new Conquest mortgage program, which CEO Mat Ishbia says is intended to help move along a market that is bottoming out and poised to rebound.

In a Facebook (NASDAQ: FB) pep talk for brokers that included an announcement about the new program, Ishbia cited a slowing pace of job losses and moves by the Federal Housing Finance Agency around forbearances and servicing backed loans as some of the reasons for his confidence.

"The purchase season is coming, so we all need to be getting ready for that," Ishbia says in the 16-minute video. He added that with markets opening back up, "and open houses happening again, purchases are going to be strong in June."

Competition will follow

Ishbia also says that his company, as by far the largest in its space, expects others to follow its lead. That could mean even lower interest rates in a market already stimulated by historically low cost of funds for individual homebuyers.

UWM works directly with brokers, not borrowers, and like the industry itself was coming off a robust 2019 when the pandemic hit. The company said its loan volume last year exceeded $107 billion, and it was the fifth straight year it was the nation's largest wholesale mortgage lender.

The rates in the new program range from 2.5% to 3.0% and are available for new purchases and refinancing, but only for primary and secondary residences, not for investment properties.

They also are not available to anyone who has closed a mortgage loan with UWM in the past 18 months.

That makes the Conquest loan a way to win back business through refinancing a loan that brokers might have lost to a competitor since then, Ishbia says.

While the rates can change, Ishbia says that locks of eight to 22 days are currently available.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Marc Rapport has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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